Question 1

If society chose to maximize average utility rather than minimum utility,

Accepted Answer

A)  society would achieve perfect income equality. 
B)  society would achieve the maximin objective. 
C)  its justice would be more utilitarian than Rawlsian. 
D)  its justice would be more Rawlsian than utilitarian. 
A)  society would achieve perfect income equality. 
B)  society would achieve the maximin objective. 
C)  its justice would be more utilitarian than Rawlsian. 
D)  its justice would be more Rawlsian than utilitarian.

Question 2

Which political philosophy believes that the government should equalize the incomes of all members of society?

Accepted Answer

A)  Utilitarianism. 
B)  Liberalism. 
C)  Libertarianism. 
D)  None of the above is correct. 
A)  Utilitarianism. 
B)  Liberalism. 
C)  Libertarianism. 
D)  None of the above is correct.

Question 3

Which of the following is correct?

Accepted Answer

A)  Governments can never improve market outcomes. 
B)  Governments can sometimes improve market outcomes. 
C)  Governments can always improve market outcomes. 
D)  Government can never make the income distribution more equal. 
A)  Governments can never improve market outcomes. 
B)  Governments can sometimes improve market outcomes. 
C)  Governments can always improve market outcomes. 
D)  Government can never make the income distribution more equal.

Question 4

Suppose that young people often borrow and then repay the loans when they are older.These actions relate to which problem in measuring inequality?

Accepted Answer

A)  In-kind transfers. 
B)  Economic life cycle. 
C)  Negative income tax. 
D)  Economic mobility. 
A)  In-kind transfers. 
B)  Economic life cycle. 
C)  Negative income tax. 
D)  Economic mobility.

Question 5

The distribution of income for Abbyville is as follows:
 
Where would the government in Abbyville set the poverty line to generate a poverty rate of 12 percent?

Accepted Answer

A)  $15,000. 
B)  $20,000. 
C)  $25,000. 
D)  $30,000. 
A)  $15,000. 
B)  $20,000. 
C)  $25,000. 
D)  $30,000.

Question 6

Which of the following does not explain why data on income distribution and the poverty rate give an incomplete picture of inequality?

Accepted Answer

A)  in-kind transfers 
B)  economic life cycle 
C)  transitory income 
D)  All of the above contribute to an incomplete picture of inequality. 
A)  in-kind transfers 
B)  economic life cycle 
C)  transitory income 
D)  All of the above contribute to an incomplete picture of inequality.

Question 7

In 2005,what percentage of U.S.families had income levels below $103,100?

Accepted Answer

A)  5 percent 
B)  20 percent 
C)  80 percent 
D)  95 percent 
A)  5 percent 
B)  20 percent 
C)  80 percent 
D)  95 percent

Question 8

Which political philosophy believes in balancing the gains from greater equality against the losses from distorted incentives?

Accepted Answer

A)  Utilitarianism. 
B)  Liberalism. 
C)  Libertarianism. 
D)  Secularism. 
A)  Utilitarianism. 
B)  Liberalism. 
C)  Libertarianism. 
D)  Secularism.

Question 9

Medicaid and food stamps are

Accepted Answer

A)  available only to the elderly. 
B)  forms of in-kind assistance. 
C)  forms of cash assistance. 
D)  transfer payments. 
A)  available only to the elderly. 
B)  forms of in-kind assistance. 
C)  forms of cash assistance. 
D)  transfer payments.

Question 10

Which of the following statements about the minimum wage is correct?

Accepted Answer

A)  An increase in the minimum wage enhances the well-being of all unskilled workers. 
B)  An increase in the minimum wage has no effect on the well-being of middle-class families. 
C)  Advocates of the minimum wage argue that the demand for labor is relatively inelastic. 
D)  Critics of the minimum wage argue that it is an undesirable way of helping the poor because it is costly to the government. 
A)  An increase in the minimum wage enhances the well-being of all unskilled workers. 
B)  An increase in the minimum wage has no effect on the well-being of middle-class families. 
C)  Advocates of the minimum wage argue that the demand for labor is relatively inelastic. 
D)  Critics of the minimum wage argue that it is an undesirable way of helping the poor because it is costly to the government.

Question 11

A common criticism of government programs that are designed to assist the poor is that

Accepted Answer

A)  those who receive assistance rarely meet the criterion for eligibility. 
B)  the majority of those below the poverty line refuse to accept government assistance. 
C)  they create incentives for people to become "needy." 
D)  they typically account for a majority of annual government expenditures. 
A)  those who receive assistance rarely meet the criterion for eligibility. 
B)  the majority of those below the poverty line refuse to accept government assistance. 
C)  they create incentives for people to become "needy." 
D)  they typically account for a majority of annual government expenditures.

Question 12

Which of the following statements illustrates diminishing marginal utility?

Accepted Answer

A)  An extra dollar of income to a poor person provides that person with more additional utility than does an extra dollar to a rich person. 
B)  An extra dollar of income to a poor person provides that person with less additional utility than does an extra dollar to a rich person. 
C)  An extra dollar of income to a poor person provides that person with the same additional utility as does an extra dollar to a rich person. 
D)  An extra dollar of income to a poor person provides that person with the same total utility as does an extra dollar to a rich person. 
A)  An extra dollar of income to a poor person provides that person with more additional utility than does an extra dollar to a rich person. 
B)  An extra dollar of income to a poor person provides that person with less additional utility than does an extra dollar to a rich person. 
C)  An extra dollar of income to a poor person provides that person with the same additional utility as does an extra dollar to a rich person. 
D)  An extra dollar of income to a poor person provides that person with the same total utility as does an extra dollar to a rich person.

Question 13

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3*Income)- 10,000.A family that earns an income of $60,000 will

Accepted Answer

A)  pay $10,000 in taxes. 
B)  receive an income subsidy of $3,000. 
C)  receive an income subsidy of $10,000. 
D)  neither pay taxes nor receive an income subsidy. 
A)  pay $10,000 in taxes. 
B)  receive an income subsidy of $3,000. 
C)  receive an income subsidy of $10,000. 
D)  neither pay taxes nor receive an income subsidy.

Question 14

The economic life cycle describes how young people usually have higher savings rates than middle-aged people.

Accepted Answer

A) True 
 B)False

Question 15

Poverty is found to be correlated with

Accepted Answer

A)  age and race but not family composition. 
B)  race only. 
C)  race and family composition but not age. 
D)  age,race,and family composition. 
A)  age and race but not family composition. 
B)  race only. 
C)  race and family composition but not age. 
D)  age,race,and family composition.

Question 16

The calculation of the poverty line includes adjustments for

Accepted Answer

A)  energy costs. 
B)  child care costs. 
C)  the level of prices. 
D)  the Earned Income Tax Credit. 
A)  energy costs. 
B)  child care costs. 
C)  the level of prices. 
D)  the Earned Income Tax Credit.

Question 17

Whether or not policymakers should try to make our society more egalitarian is largely a matter of

Accepted Answer

A)  economic efficiency. 
B)  political philosophy. 
C)  egalitarian principles. 
D)  enhanced opportunity. 
A)  economic efficiency. 
B)  political philosophy. 
C)  egalitarian principles. 
D)  enhanced opportunity.

Question 18

The United States has more income inequality than Brazil and South Africa.

Accepted Answer

A) True 
 B)False

Question 19

The country that has the most income equality is

Accepted Answer

A)  Japan. 
B)  Brazil. 
C)  South Africa. 
D)  the United States. 
A)  Japan. 
B)  Brazil. 
C)  South Africa. 
D)  the United States.

Question 20

U.S.income data over the last seventy years suggests that the distribution of income

Accepted Answer

A)  has gradually become more equal over the entire time period. 
B)  has gradually become less equal over the entire time period. 
C)  gradually became less equal until about 1970,then became more equal from 1970 to 2005. 
D)  gradually became more equal until about 1970,then became less equal from 1970 to 2005. 
A)  has gradually become more equal over the entire time period. 
B)  has gradually become less equal over the entire time period. 
C)  gradually became less equal until about 1970,then became more equal from 1970 to 2005. 
D)  gradually became more equal until about 1970,then became less equal from 1970 to 2005.

Exam 20: Income Inequality and Poverty

If society chose to maximize average utility rather than minimum utility,

Which political philosophy believes that the government should equalize the incomes of all members of society?

Which of the following is correct?

Suppose that young people often borrow and then repay the loans when they are older.These actions relate to which problem in measuring inequality?

The distribution of income for Abbyville is as follows: Where would the government in Abbyville set the poverty line to generate a poverty rate of 12 percent?

Which of the following does not explain why data on income distribution and the poverty rate give an incomplete picture of inequality?

In 2005,what percentage of U.S.families had income levels below $103,100?

Which political philosophy believes in balancing the gains from greater equality against the losses from distorted incentives?

Medicaid and food stamps are

Which of the following statements about the minimum wage is correct?

A common criticism of government programs that are designed to assist the poor is that

Which of the following statements illustrates diminishing marginal utility?

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3*Income)- 10,000.A family that earns an income of $60,000 will

The economic life cycle describes how young people usually have higher savings rates than middle-aged people.

Poverty is found to be correlated with

The calculation of the poverty line includes adjustments for

Whether or not policymakers should try to make our society more egalitarian is largely a matter of

The United States has more income inequality than Brazil and South Africa.

The country that has the most income equality is

U.S.income data over the last seventy years suggests that the distribution of income

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters